“Off with his head!”
Okay, so maybe the order to fire Ali al-Naimi, Saudi Arabia’s oil minister, didn’t sound that drastic when it was issued. However, that doesn’t diminish how earth shattering this decision is for the global oil market.
Think about it…
Ali al-Naimi has been (arguably) one of the most important figures in the oil market for roughly 21 years, when he became the minister of petroleum and mineral resources. We’re talking about the man in charge of approximately 266 billion barrels of proven oil reserves and nearly one-third of OPEC’s oil output.
Perhaps the failure in Doha was the final straw.
And if you put yourself in King Salman’s checkered ghutrah, you don’t make this decision lightly.
Yet it’s not Ali al-Naimi’s replacement, Khalid al-Falih, who will be shaping the Saudi Kingdom’s energy future.
For that, we have to turn to an emerging powerhouse in the Saudi Kingdom…
Saudi Game of Thrones
Unless you happen to follow Saudi politics closely, it’s probably safe to assume that you’ve never heard of Deputy Crown Prince Mohammed bin Salman.
Don’t worry, you’re going to start hearing his name a lot more from now on. After all, word around the fire is that the ousted Ali al-Naimi’s successor is a close friend and ally to the Deputy Crown Prince.
And this young Saudi Prince has a drastically different energy road map ahead.
Remember, Prince Mohammed bin Salman is the one leading the charge to wean Saudi Arabia from its addiction to crude oil.
It makes perfect sense, doesn’t it?
Now, I’m not suggesting that the country’s oil demand will suddenly outstrip supply overnight. It won’t happen in the next few years. But given that the Saudi population has grown to more than 32 million people (a 14% increase over the last 10 years), it shouldn’t be surprising to learn that its addiction to crude is also on the rise:
A few years ago, Citigroup even made the bold prediction that Saudi Arabia may become a net oil importer by 2030.
Considering its crude oil exports account for an overwhelming amount of the country’s annual revenue, it’s best they address the problem now… which is where the young Deputy Crown Prince comes into play.
They even called it “Saudi Vision 2030.”
The plan is just as bold as one would expect, too. Prince Mohammed even suggested his country wouldn’t need to consume a drop of oil by 2020.
So do they really have a shot?
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Fool Me Twice, Shame on Me…
Call me an optimistic pessimist if you want, but the rosy predictions will be hard earned… and I’m not convinced.
And you shouldn’t be, either.
Last week, I mentioned how hopelessly addicted the Saudis were to crude oil. This, dear reader, is possibly a ship that’s far too large to turn around on a dime. At the heart of the new Saudi plan is the upcoming public sale of approximately 5% of Saudi Aramco.
As I’ve said before, don’t expect the Saudis to hand over the keys to Ghawar or anything. They’re simply courting Big Oil to take a long-term stake in some of Saudi Aramco’s upstream operations… which hold an estimated value right now of approximately $2 trillion.
Now one can’t help but wonder whether the Saudis see the writing on the wall.
If Saudi Arabia is desperately trying to wean itself off of oil, it’s not far-fetched to think that the Saudis know they’re losing control.
And despite this mad dash to curb its reliance on crude oil, there’s actually something far worse looming down the road.
I’ll explain everything next week.
Until next time,
Keith Kohl
Check us out on YouTube!A true insider in the technology and energy markets, Keith’s research has helped everyday investors capitalize from the rapid adoption of new technology trends and energy transitions. Keith connects with hundreds of thousands of readers as the Managing Editor of Energy & Capital, as well as the investment director of Angel Publishing’s Energy Investor and Technology and Opportunity.
For nearly two decades, Keith has been providing in-depth coverage of the hottest investment trends before they go mainstream — from the shale oil and gas boom in the United States to the red-hot EV revolution currently underway. Keith and his readers have banked hundreds of winning trades on the 5G rollout and on key advancements in robotics and AI technology.
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